Is Barnes & Noble in Trouble?

Borders, America's second biggest book store chain, died this summer, its red-trimmed outlets sinking inexorably into a savage sea of red ink. (Beat that lede, Wall Street Journal!) For Barnes & Noble, the most popular book chain, this could be interpreted as good news: its biggest competitor was gone. Or, bad news: book stores are a dying industry.

It's the same story as the newspaper industry: increased competition from online-only sites prompts legacy book stores to build up their own online revenue, which grows, but never fast enough to make up for the decline of the traditional business. This is the Barnes & Noble story today. From the WSJ:

Underscoring lack of growth in the book business, Barnes & Noble Inc. reported lower sales in its fiscal second quarter, as a continued decline in its brick-and-mortar sales outweighed growth at its website.

The bookstore chain's sank 16%, to $14.59, after the company reported a worse-than-expected loss of $6.6 million, or 17 cents a share, for the quarter ended Oct. 29

BN is pushing its digital tablet, the Nook, big time—the store's revenue is actually up, from selling content to Nook owners, but profits haven't risen, because the investment to get the Nook up and running is huge. And if that's the plan for the future, it's fair to ask: will the Nook ever really become big enough to support an entire company, in an iPad-dominated world? It doesn't take much imagination to see the Nook failing to make gains against the iPad and Kindle, and BN's website failing to pull in market share against Amazon, and the business of actual, physical book stores in irreversible decline due to digital retailing and e-books, and... a few years down the road, Barnes & Noble is the next Borders.